Marketing Ch. 15

Exchange Controls

limit the amount of foreign exchange and the exchange rate against other currencies.

Quotas - Illegal

limits on the amount of foreign imports that they will accept in certain product categories. The purpose of a quota is to conserve on foreign exchange and to protect local industry and employment.

International Trade System

restrictions exist on trade between nations: tariffs, quota, embargos, exchange controls, and nontariff trade barriers.

Nations' Political-Legal Environments

-Attitudes toward international buying -Government bureaucracy -Political stability -Monetary regulations

Critics worry that marketing strategies may be negatively impacting global cultures

-"Americanization" and a loss of individual country identity is of concern. -Backlash against American globalization has sometimes resulted. -To succeed abroad, American firms must adapt to local cultural values and traditions. ---Cultural exchange goes both ways.

Global Pricing Strategies

-Companies face many considerations in setting their international prices. --Standard pricing methods ignore cost differentials and local market conditions. -International prices tend to be higher than domestic prices because of price escalation --Some global firms create simpler or smaller versions of products to sell abroad.

Key economic communities

-European Union (EU) -North American Free Trade Agreement (NAFTA) -Latin America and South America also have free trade zones

Global promotion strategies

-Firms can either adopt the same promotion strategy they used in the home market or change it for each local market -Some global firms use a standardized advertising theme around the world with minor adaptations. -Other firms follow a communication adaptation strategy by fully adapting an advertising message for local markets. -Changes may also have to be made due to media availability

Reasons to consider going Global

-Foreign attacks on domestic markets may be countered by counterattacks abroad. -Customers may be expanding globally and require international servicing. -Foreign markets may offer growth opportunities when domestic market is stagnant. -Reduce dependency of single markets. -Higher profits in foreign markets. ---Risks must be weighed against the firm's ability to operate globally.

World Trade Organization & GATT

-Helps trade: reduces tariffs and other international trade barriers. -Sets global standards for trade. -WTO enforces GATT rules by mediating disputes and enforcing trade sanctions.

Factors in the economic environment reflect a country's market attractiveness

-Industrial structure: shapes a country's product and service needs, income levels, and employment levels. -Income distribution: is a second important factor.

Joint Venturing approaches

-Licensing -Contract manufacturing -Management contracting -Joint ownership

Cultural environment

-Sellers must examine the ways consumers in different countries think about and use products before planning a market program. ---Mistakes can be embarrassing and costly. -Business norms and behaviors vary by country. -Companies that understand cultural nuances can use them to advantage when positioning products internationally.

Four types of industrial structure

-Subsistence economies -Raw material exporting economies -Industrializing economies -Industrial economies

Global Distribution Channels Differ

-The number and types of intermediaries --Size and character of retail units differ as well, presenting challenges. -The transportation infrastructure --Coca-Cola has adapted its distribution methods to meet local Chinese market needs.

Global Marketing Today

-The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. -International trade is booming. -Global competition is intensifying. -Risks associated with globalization are increasing.

Define its international marketing objectives and policy

-What volume of foreign sales is desired? -How many countries to market in? -What types of countries to enter?

Global Firm

A firm that, by operating in more than one country, gains R&D, production, marketing and financial advantages in its costs and reputation that are not available to purely domestic competitors.

Direct Investment Adv. & Dis.

Advantages: -Lower costs due to cheap labor or raw materials -Firm may improve image in host country. -Better adaptation of products to country. -Firm keeps full control over the investment. Disadvantages: -Currency risks, market failure, government change.

Direct Investment

Entering a foreign market by developing foreign-based assembly or manufacturing facilities.

Joint Venturing

Entering foreign markets by joining with foreign companies to produce or market a product or service.

GATT

General Agreement on Tariffs and Trade

Subsistence economies

In a subsistence economy the vast majority of people engage in simple agriculture. They consume most of their output and barter the rest for simple goods and services. They offer few market opportunities.

Emerging economies (Industrializing economies)

In an emerging economy fast growth in manufacturing results in rapid overall economic growth. Examples include the BRIC countries - Brazil, Russia, India, China. As manufacturing increases the country needs more imports of raw textile materials, steel, and heavy machinery, and fewer imports of finished textiles, paper products and automobiles. Industrialization typically creates a new rich class and a small but growing middle class both demanding new types of imported goods.

Types of Exporting

Indirect: working through independent international marketing intermediaries. Direct: company handles its own exports.

Industrial economies

Industrial economies are major exporters of manufactured goods, services, and investment funds. They trade goods among themselves and also export them to to other types of economies for raw materials and semi finished goods. The varied manufacturing activities of these industrial nations and their large middle class make them rich markets for all sorts of goods. Examples include the United States, Japan, and Norway.

Income distribution

Industrialized nations may have low, medium, & high income households. In contrast countries with subsistence economies may consist mostly of households with very low family incomes. Still other countries may have households with only either very low or very high incomes. Even poor or emerging economies may be attractive markets for all kinds of goods. These days companies in a wide range of industries - from computers to candies are increasingly targeting even low income consumers in emerging economies. For example India sells Cadbury.

Global Distribution Channels

International firms must take a whole-channel view of distributing products to final consumers and consider: -Channels between nations -Channels within nations -The entire global value delivery network

Barter

Many countries barter to pay for purchases from other countries. Barter involves a direct exchange of goods or services.

Global Pricing Strategies Cont.

Setting prices for foreign subsidiaries can be problematic: -Charging too much results in higher tariff duties and lower income taxes. -Charging too little can result in charges of dumping if price is less than the product costs or less than is being charged in the home market. The internet makes price differences more obvious and has forced more standardized pricing.

Raw material exporting economies

These economies are rich in one or more natural resources but poor in other ways. Much of their revenue comes from exporting these resources. Example are Chile (tin and copper), the Democratic Republic of the Congo (copper, cobalt & coffee), and Saudi Arabia (oil). These countries are good markets for large equipment, tools and supplies, and truck. If there are many foreign residents and a wealthy upper class they are also a marker for luxury goods.

Communication adaptation

a global communication strategy of fully adapting advertising messages to local markets.

Contract Manufacturing

a joint venture in which a company contracts with manufacturers in a foreign market to produce the product or provide its service.

Joint Ownership

a joint venture in which a company joins investors in a foreign market to create a local business in which the firm shares joint ownership and control

Management Contracting

a joint venture in which the domestic firm supplies the management know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than products.

Licensing

a method of entering a foreign market in which a company enters into an agreement with a licensee in a foreign market.

Product adaptation

adapting a product to meet local condition or wants in foreign markets.

Adapted global marketing mix

adjusting the marketing strategy and mix elements to each international target market, bearing more costs but hoping for a larger market share and return.

Embargo

block on trade

Product invention

creating new products or services for foreign markets

Exporting

entering a foreign market by selling goods produced in the company's home country, often with little modification

Straight product extension

marketing a product in a foreign market without any change

Regional Free Trade Zones

or (economic communities): a group of nations organized to work toward common goals in the regulation of international trade.

Before going abroad

possible countries should be listed and ranked based on several factors. The markets with the greatest long-run ROI should be chosen

Nontariff Trade Barriers

such as biases against it bids, restrictive product standards, or excessive regulations.

Tariff

taxes on certain imported products designed to raise revenue or to protect domestic firms. Tariffs are often used to force favorable trade behaviors from other nations.

Standardized global marketing mix

using basically the same marketing strategy and mix in all international markets.